The first task of management is to define what results and performance are in a given organization.

It is the specific function of management to organize the resources of the organization for results outside the organization.

Management should not even try to guess at the answers – it should always go to the customers in a systematic quest for them.

Management’s concern and management’s responsibility are everything that affects the performance of the institution and its results – whether inside or outside, whether under the institution’s control or totally beyond it.

Anyone who is willing to use marketing as the basis for strategy is likely to acquire leadership in an industry or a market fast and almost without risk.

Entrepreneurial strategies are as important as purposeful innovation and entrepreneurial management. Together, the three make up innovation and entrepreneurship.

We should utilize the GAIN process to capture the key information.

The essential purpose of a business is to create a customer. To this end, only marketing and innovation can produce results; all other activities are simply part of the cost of doing business.

Profits are not made by differential cleverness, but by differential stupidity. The strategies work, not because they are clever, but because most suppliers – of goods as well as of services, business as well as public service institutions – do not think.

Anyone who asks the question, “What does the customer really buy? Will win the race. In fact, it is not even a race since nobody else is running. What explains this? Unfortunately, suppliers, whether of products or of services, tend to follow the economists on the definition of “price”. The argument should go as follows: “What the customer pays for each piece of the product has to work out as Y dollars for us. But how the customer pays depends on what makes the most sense to them. It depends on what the product does for the customer. It depends on what fits their reality. It depends on what the customer sees as ‘value.’” Price in itself is not “pricing,” and it is not “value.”

Just as management has become the specific organ of all contemporary institutions, and the integrating organ of our society of organizations, so innovation and entrepreneurship have to to become an integral life sustaining activity in our organizations, our economy, our society. This requires of executives in all institutions that they make innovation and entrepreneurship a normal, ongoing, everyday activity, a practice in their own work and in that of their organization.

Key Questions

At a high level these are the key questions that must be answered:

• Who do we serve?
• What does our core user(s) of our service need from us
• What is our core strength?
• What is our edge?
• What is our core score?
• What actions can we take today?

Who do we serve?

Who is the customer? – the actual customer and the potential customer?

Where are they?

How do they buy?

How can they be reached?

The consumer, that is, the ultimate user of a product or a service, is always a customer. But they are never the customer; there are usually at least two – sometimes more.

Some businesses have two customers unconnected with each other. For example, Kraft and the Platform, the BU leader, the line of business manager?

There are also businesses in which economically there is only one customer while strategically – in terms of buying decision – there are two or more.

What is our definition of a transaction?

Are we market-focused, market-driven or product-driven? The test of an innovation is always what it does for the user. Hence, entrepreneurship always needs to be market-focused, indeed, market-driven.

Rarely do traditional product businesses build any team or institutional trust.

Do we have the flexibility and willingness to accept the verdict of the market? Businesses that are being betrayed by their habits will not admit it and will find all kinds of excuses to not change.

Five Fairly Common Bad Habits

There are in particular five fairly common bad habits that enable newcomers to use entrepreneurial judo and to catapult themselves into a leadership position in an industry against the entrenched, established companies

1. The first is what American slang calls “NIH” (“Not Invented Here”), the arrogance that leads a company or an industry to believe that something new cannot be any good unless they themselves thought of it.
   1. They don’t want outsiders to tell them how to do their business. They may build trust between individuals on either dies of the deal, but this tends to be around transactional items (SLAs?, PDDs?, budgets?). Rarely do traditional product businesses build any team or institutional trust.
2. The second is the tendency to “cream” a market, that is, to get the high profit part of it. “Creaming” is a violation of elementary managerial and economic precepts. It is always punished by loss of market.
3. Even more debilitating is the third bad habit: the belief in “quality.” “Quality” in a product or service is not what the supplier puts in. It is what the customer gets out and is willing to pay for. A product is not “quality” because it is hard to make and costs a lot of money, as manufacturers typically believe. That is incompetence. Customers pay only for what is of use to them and gives them value. Nothing else constitutes “quality.”
4. The delusion of the “premium” price is the 4^th bad habit and is closely related to “creaming” and “quality”. A “premium” price is always an invitation to the competitor. The only way to get a higher profit margin, except through a monopoly, is through lower costs. The attempt to achieve a higher profit margin through a higher price is always self-defeating. What looks like higher profits for the established leader is in effect a subsidy to the newcomer who, in a very few years, will unseat the leader and claim the throne for themselves. The delusion of higher profits to be achieved through “premium” prices is almost universal.
5. Maximize rather than optimize. As the market grows and develops they try to satisfy every single user through the same product or service. The manufacture has maximized what the product can do. As a result the product no longer satisfies anyone. For, by trying to satisfy everybody, one always ends up satisfying nobody.

What does our core user(s) of our service need from us

• What does the customer buy? The new way of saying this incorporated in the JTBD Framework and JTBD Framework - Strategyn
• What does the customer consider value?
• What do they look for when they buy the product?
• The customer never buys a product. The customer buys the satisfaction of a want. They buy value.
• What does the customer need to do to succeed in their market?
• What do the customers need for a service to be truly a service to them? This is always the first question in the entrepreneurial strategy of changing utility, values, and economic characteristics. Price is usually almost irrelevant in the strategy of creating utility. The strategy works by enabling customers to do what serves their purpose. It works because it asks: What is truly a “service,” truly a “utility” to the customer?
• How items are paid is structured to the needs and the realities of the consumer (examples – giving away the razor and selling the blades). It charges for what represents “value” to the customer rather than what represents “cost” to the supplier.
• Whatever customers buy has to fit their realities, or it is of no use to them.

It is nothing but elementary marketing. To start out with the customer’s utility, with what the customer buys, with what the realities of the customer are and what the customer’s values are – this is what marketing is all about.

The test of an innovation is always what it does for the user. Hence, entrepreneurship always needs to be market-focused, indeed, market-driven.

What is our core strength?

• Are we in the right business or should we change our business?
• How receptive are we to change? Do we have systematic methods to look for and to anticipate change?
• How systematic are we looking at opportunities? Are we being purposefully opportunistic?
• What will our business be?

What is our edge?

What is our core score?

• What results are we looking for?
• How will we measure our performance & results?

Objectives of Performance & Results

• Market standing
• Innovation
• Productivity
• Physical and financial resources
• Profitability
• Manager performance and development
• Worker performance and attitude
• Public responsibility

What actions can we take today?

People

First you think about the company. Then you think about the employees. Then you think about yourself.

While managers proclaim that people are their major resources, the traditional approaches to the managing of people do not focus on people as a resource, but as problems, procedures, and costs.

An accounting system which would show people as “capital investments” would therefore make a major difference.

What do I do as your manager, and what does your company do that helps you the most in your job?

What do I do as your manager, and what does the company do, that hinders you the most in your job?

What can you do that will help me, as your manager, do the best job for the company?

We need to encourage habits of flexibility, of continuous learning, and of acceptance of change as normal and as opportunity – for institutions as well as for individuals. Individuals will increasingly have to take responsibility for their own continuous learning and relearning, for their own self-development and for their own careers.

Strategy – The New Certainties

1. The collapsing birthrate in the developed world

Increasingly, in all developed countries, the strategy of all institutions will have to be based, from now on, on the totally different assumption of a shrinking population, and especially of a shrinking young population.

2. Shifts in the distribution of disposable income

Practically none knows the truly important figure: the share of the disposable income of their customers. Shares in disposable income are the foundation of all economic information. It is usually the most easily obtainable. It is usually also the most reliable foundation for strategy.

The share of disposable income allocated to economic satisfaction has steadily dropped during this century in all developed countries. The four growth sectors during the 20^th century, respectively, Government, Health Care, Education, Leisure.

3. Defining performance

The pension funds and the mutual funds are now the legal “owners” of the key property in a modern, developed society, that is, of the publicly owned corporations.

4. Global competitiveness

Any institution – and not just businesses – has to measure itself against the standards set by each industry’s leaders anyplace in the world.

5. The growing incongruence between economic globalization and political splintering

The period of worldwide structural change and uncertainty is growing incongruence between economic reality and political reality. The world economy is increasingly global. Business can no longer define their scope in terms of national economies and national boundaries. They have to define their scope in terms of industries and services worldwide.

Information

What information do I owe to the people with whom I work and on whom I depend? In what form? And in what time frame?

What information do I need myself From whom? In what form? And in what time frame?

Other Key Questions

• What results are we looking for?
• Do we have built-in mechanisms on learning to improve?
• What information do we need to perform each individual's role and whom do they depend on for that information? In what form? In what time frame?
• Who are the competitors in this business, large and small, new and old?
• Who has what share, globally and in each market? Where do we fit in?
• What are the characteristics of this business? Is it commodity or high value or somewhere in between?
• Is it long cycle or short? Where is it on the growth curve? What are the drivers of profitability?
• What are the strengths and weaknesses of each competitor? How good are its products? How much does each one spend on R&D? How big is each sales force? How performance-driven is each culture?
• Who are this business's main customers, and how do they buy?
• What has each competitor done in the past year to change the playing field?
• Has anyone introduced game-changing new products, new technologies, or a new distribution channel?
• Are there any new entrants, and what have they been up to in the past year?
• What have you done in the past year to change the competitive playing field?
• Have you bought a company, introduced a new product, stolen a competitor's key salesperson, or licensed a new technology from a startup?
• Have you lost any competitive advantages that you once had—a great salesperson, a special product, a proprietary technology?
• What scares you most in the year ahead—what one or two things could a competitor do to nail you?
• What new products or technologies could your competitors launch that might change the game?
• What M&A deals would knock you off your feet?
• What can you do to change the playing field—is it an acquisition, a new product, globalization?
• What can you do to make customers stick to you more than ever before and more than to anyone else?

Coaching questions: 6 types and 71 powerful examples every coach and counselor should know